Author: Sun Zhifu
Recently, 8 Tesla CyberTrucks were unveiled in 8 cities in China, including Shanghai, Beijing, Shenzhen, Chengdu, Nanjing, Hangzhou, Xi'an, and Chongqing.
Behind the infinite beauty of the Chinese market is that Tesla has just had a very painful week.
On January 25, Tesla officially released its fourth quarter and annual results report for 2023. The next day, Tesla's stock price went all the way down and finally closed at 182$63, the biggest drop of 12 in nearly a year13%, the remaining market capitalization is 5805700 million US dollars, evaporating about 80.1 billion US dollars (about 574.3 billion yuan) overnight.
It is also worth mentioning that Tesla's stock price has fallen by as much as 26 percent from the beginning of the year to January 265%, and the market value evaporated by about 210 billion US dollars (about 1 yuan.)5 trillion).
In 2023, Tesla not only successfully completed its annual sales target, but also raised its revenue to a new height, but it was unexpectedly "hit in the face" in the capital market.
Growth slowed sharply and profits fell sharply
According to the financial report data released by Tesla, thanks to the closure of the Shanghai factory in the fourth quarter and the smooth ramp-up of the new Model 3 production capacity, Tesla completed more than 48 new car deliveries in the fourth quarter of 202340,000 units, a year-on-year increase of nearly 20%. Achieved revenue of about 251US$6.7 billion, up 3% year-on-year, of which automotive revenue was 21.5 billionUS$6.3 billion, a slight increase of 1% year-on-year.
For the whole year of 2023, Tesla will complete the delivery of 180860,000 units, barely achieving the annual sales target of 1.8 million units. Full-year operating income increased by 19% year-on-year to 967US$7.3 billion, of which the automotive business revenue was 82.4 billion$1.9 billion, up 15% year-on-year.
The increase in sales volume and revenue made Tesla CEO Elon Musk full of expectations for the new year at the earnings conference: "The continuous growth of revenue performance exceeded market expectations, providing strong support for R&D investment, product improvement and enterprise operation in the new year." ”
But Musk's confidence cannot be transmitted to Wall Street, and Morgan Stanley said that the imbalance between supply and demand of electric vehicles may put pressure on Tesla this year. Analysts at Wedbush, a well-known American investment bank, also believe: "In the coming year, the demand for electric vehicles will inevitably slow down." Tesla will have to choose whether to continue cutting cars** to remain competitive, or to remain stable in 2024. ”
The reason behind the capital market's lack of confidence in Tesla may be Tesla's sharply slowed growth rate and sharply falling profit margins.
In the fourth quarter, Tesla's vehicle sales revenue increased by only 1% from the same period in 2022 to $21.6 billion due to price cuts.
GAAP net income attributable to common shareholders was 79US$2.8 billion, an increase of 115% year-on-year. That's almost double compared to the same period in 2022, but $5.9 billion in profit comes from tax incentives. Without this effect, profits would have declined. Non-GAAP net income attributable to common shareholders was only 24US$8.5 billion, a year-on-year decrease of 39%.
Tesla's gross profit margin was 176%, down 612 basis points from the same period in 2022 and the lowest level since 2019, with an operating margin of 82%, down 784 basis points from the year-ago quarter.
From the perspective of the whole year, Tesla's revenue increased by 19% year-on-year last year, but compared with the high growth rate of more than 50% in the previous two years, the revenue growth rate has slowed down significantly.
In the eyes of the outside world, the slowdown in Tesla's revenue growth is not unrelated to the frequent price adjustment of its models. Through official reductions and other means, Tesla's sales reached 1.81 million units last year, a year-on-year increase of 38%, which is worthy of reaching the expected target of 1.8 million units. However, according to statistics, from 2021 to 2023, Tesla's global sales growth rate will be % and 38% year-on-year, respectively, and the annual sales growth rate will slow down significantly.
In 2023, Tesla saw its first annual profit decline since 2017, and its gross margin for the full year was 182%, down 735 percentage points; Adjusted earnings before interest and taxes (EBITDA) were 166US$3.1 billion, down 13% year-on-year; Net income attributable to common shareholders on a non-GAAP basis was 108US$8.2 billion, down 23% year-on-year; Diluted earnings per share were 3$12, up from a record 4 in 2022$07 is down 23%.
In fact, since last year, Tesla's gross profit margin has lit up a "red light", and the first to fourth quarters are. 6%, never back to more than 20%.
In 2022, Tesla is still one of the most profitable automakers in the world, and after just one year, Tesla's earning power has been greatly reduced. And for 2024, Tesla is also obviously not confident.
There is an urgent need to drive volume models to stimulate sales growth
Some analysts once predicted that Tesla's car sales in 2024 will be about 2.2 million units, a year-on-year increase of about 20%.
However, for the 2024 delivery target, Tesla rarely did not disclose it at the 2023 financial report. Tesla has only been very cautious about saying that production growth, deliveries and shipments will slow in 2024 and could be significantly lower than in 2023 as the company is working on next-generation vehicles.
Faced with the question of "whether Tesla expects to achieve a 50% sales compound annual growth rate in 2024 or 2025", Tesla's chief financial officer Vaibav Tanya also admitted frankly: "Tesla will not grow at the same rate as before in some periods. ”
Tesla said that factors such as the reduction of the average selling price of vehicles and the increase in operating expenses driven by artificial intelligence and other R&D projects have affected Tesla's operating income and profit in 2023.
Regarding Tesla's gross profit margin in fiscal 2024, Tesla's chief financial officer Vaibh** Taneja said that Tesla's focus in 2024 is to reduce vehicle costs.
Tesla CEO Elon Musk also said that a 1% reduction in costs could save about $1 billion. In addition, he believes that Tesla's profit margins will perform well if interest rates fall rapidly.
Tesla feels that it is "currently in the middle of two major growth waves". The first wave will start with the global expansion of the Model 3 Y platform, and the next wave will be started by the global expansion of the next generation of vehicles.
It is not difficult to see that Tesla urgently needs to launch a volume model to stimulate sales growth. But this car is clearly not the Cybertruck that is touring China these days.
After a number of ticket jumps, Tesla officially sold the Cybertruck pickup truck model this quarter. At present, the annual production capacity of the Cybertruck at the Texas plant is less than 1250,000 units.
Tesla said it expects the Cybertruck to ramp up production for a longer period than other models, given the complexity of its manufacturing. Musk warned in October that the Cybertruck would not generate significant cash flow for a year to 18 months.
Gene Munster, co-founder of Deepwater Asset Management and Tesla investor, said: "Tesla's margin outlook in 2024 will be stable rather than expanding. He also said that deliveries of the Cybertruck could reach 35,000 units in 2024 and said that of the 2 million people on the Cybertruck waiting list, the actual number could fall below 500,000 in the next 6 months due to pricing reasons.
Hope for the next generation platform
Previously, Tesla executives said that they would completely rethink the production of electric vehicles to achieve the next generation of vehicles to produce faster, cheaper, smaller powertrains and lighter weight.
At its investor day event in March last year, Tesla unveiled its first information about its next-generation vehicles. The electric car, called the Model 2, is expected to cost $2Around $50,000.
Musk revealed at the earnings conference: "The Tesla team is working on launching the next generation of vehicles at the Texas Gigafactory, and the next generation of vehicles is expected to be in production in the second half of 2025." ”
Musk has revealed that the next-generation model will be smaller than the Model 3 and Model Y currently on sale, and the cost will be half of the existing platform. Musk believes that the launch of a new model will be a difficult project, but when optimized, the model could be a game-changer for mass production of cars. For the arrival of the new car, Musk even said that he would "sleep on the production line".
According to related reports, Tesla issued a tender invitation to the company last year with the internal code name of the Redwood model, and the weekly production is expected to reach 10,000 units, for which Tesla also dismantled a Honda Civic to study how to further reduce the cost of new cars.
The new car, codenamed NV9X, will be available with and without a steering wheel, and according to Tesla's timetable, the new car will enter the actual production stage in June 2025.
At the investor conference in May last year, Musk said at the meeting that in addition to the pure electric pickup Cybertruck, which was about to be mass-produced at that time, Tesla also held two "trump cards". The two new cars will be built on Tesla's third-generation pure electric platform, and will take on the annual sales target of 5 million units in the future, and help Tesla squeeze into the queue of the world's top 5 car companies in one fell swoop.
I don't know if it is to accelerate the mass production of next-generation models, Tesla's R&D investment will increase significantly in 2023.
According to the financial report, Tesla's R&D expenses last year were 396.9 billion US dollars (about 28.3 billion yuan), reaching an all-time high. Tesla officials said that Tesla is continuing to invest its main energy and resources in the core research and development, and constantly improve the hard core strength of products.
Betting on the new car of the third-generation pure electric platform, Tesla has naturally entered a state of "slowdown", and at the same time, the cost reduction has almost reached the limit.
Cost reduction has always been Tesla's conventional means in the face of competition. Since the release of the Model 3 in 2016, Tesla has been committed to continuously refining the process to reduce production costs, and former CFO Zach Kirkhorn has revealed that the cost of a single car in the Model 3 will be reduced by at least 30% by 2022.
At the 2023 earnings conference, Tesla also made a rare expectation management for continuous cost reduction. Musk believes that with Tesla's current production scale, a few dollars of cost changes will bring about cost "changes", and it is obviously unrealistic to ask for the future at the speed of past cost reduction, and the limit of cost reduction has almost been reached.
The question is, since the cost reduction has almost reached the limit, why did Tesla reopen the "price reduction" competition mode in January. Perhaps in the face of the increasingly competitive Chinese market, Tesla has "exhausted its skills". And pulling the unsellable Cybertruck around the exhibition may be just to gain a little more "presence" for himself. I just don't know that this Cybertruck, which can block bullets, can help Tesla carry a few "blow to the head" in 2024.